Pay-Per-Mile Insurance: All You Need to Know

Do you drive less than 10,000 miles every year? Looking to save big money on your car insurance? Pay-per-mile insurance might be right for you!

Think of your car insurance policy as an all-you-can-eat buffet. You pay a certain fee upfront for the ability to eat (or, in this case, drive) and you can have as much or as little food as you want. But what if you aren’t very hungry? The guy next to you has come back with five full plates of food, but you only had an appetizer. Why should you be paying the same amount?

The same can be said for your car insurance policy. What if you live in a big city and rely mostly on public transportation to get around? How about if you work remotely and only drive to go to the grocery store or see friends and family? Why should you pay the same as your neighbor who has an hour and a half commute every day?

If you’ve been asking yourself these types of questions, there’s a relatively new offering for car insurance that might be right for you. It’s called pay-per-mile insurance.

Pay-Per-Mile Insurance

Pay-per-mile insurance is an auto insurance plan that provides full coverage for your car, truck or SUV based on how many miles you drive. After all, people who are out on the road less are also considered to be low-risk drivers because they’re less likely to get in accidents solely on the amount of time they spend on the road.

How Does Pay-Per-Mile Insurance Work?

You start off with a much cheaper base rate each month, which is determined based on your age, gender, marital status, driving record, claims history, where you live, and other factors that influence your car insurance rates, regardless of what plan you sign up for. This is very similar to your standard insurance policy, but many of the similarities stop there.

Then, a mileage rate is added on top of your base rate, which is often just a few cents per mile. This is tracked by either using an app and submitting pictures of your odometer or having your insurance company install a device that attaches directly to your vehicle to keep track of your mileage.

At the end of the month, your insurance company will tally up the miles you put on your car and add it to your base rate to come up with a final bill for the month. And if you drive less than the average person (usually less than 10,000 miles each year), you may end up with a bill that is significantly cheaper than what you’re used to paying!

Where Can I Get Pay-Per-Mile Insurance?

Pay-per-mile is a relatively new form of car insurance, but that doesn’t mean you’ll have to jump through hoops to find a company willing to offer you a policy.

One of the first companies to specialize in pay-per-mile insurance was Metromile, but in the past several years, insurance giants like Allstate and Nationwide have also jumped on the pay-by-the-mile train over the past couple years with their Milewise and SmartMiles programs.

But, regardless of which company you choose, you will want to rely on a trusted source to compare your rates and find the best price. Luckily for you, you’ve found the right place – just enter your ZIP code below to get started.

Find out if pay-per-mile insurance is right for you

Pay-Per-Mile Insurance Pros and Cons

Some advantages of purchasing pay-per-mile insurance include the following:

  • Saving Money

    If you log on less than 8,000 miles a year or around 600 miles a month, pay-per-mile insurance may be for you. You can receive a lower base and per-mile fee that often has a cap for a particular mileage limit. Especially during times like the COVID-19 pandemic, studies have shown that drivers typically cut driving in half. But even during more “normal” times, drivers can save big on their monthly bill if they drive less. Plus, when you drive less, you’ll save big money on regular car maintenance too!

  • Saving the Environment

    By keeping track of how many miles you have logged on each day, having pay-per-mile insurance can make you more mindful of diminishing your carbon footprint. For instance, instead of driving around for a good parking spot, you may just park further and walk more. Or let’s say you live downtown or in a sprawling city, then you may choose to take public transportation instead of driving your car. Even if you live in the suburbs, you can choose to carpool or car share to lower traffic congestion and car emissions from polluting the air and harming the environment, all while saving money on your monthly car insurance bill.

  • Staying Up-to-Date on Your Driving Habits

    Since you will be wanting to keep track of your miles, you will start being more aware of your regular driving habits. However, being more conscientious will remind you to practice safe driving habits while out on the road and encourage you to walk or bike shorter distances versus hopping into your car to travel instead. It’s good for you, your car, your health, and the environment – a true win/win/win!

Some disadvantages of purchasing pay-per-mile insurance include things like:

  • Losing Money

    You might feel you are saving more by purchasing pay-per-mile insurance, but if you love being in your car and tend to commute for hours on a regular basis, this type of insurance policy is not for you. Even if you work from home, think of how often you drive far to visit family members and friends. How many day trips and road trips do you take each month? Take time to consider your driving habits to determine if it is worth investing in a pay-per-mile insurance plan.

  • Unpredictability

    It may be difficult to gauge how much your pay-per-mile insurance will be each month since it is dependent on how many miles you drive. Additionally, you might feel stressed if you tend to drive more than you predicted. In that case, it can be better and give you more peace of mind to get regular auto insurance instead.

Pay-Per-Mile Insurance FAQs

  • How do I file a claim?
To file a claim, simply fill out a claims form on the company’s website online. You can also call them directly. Always make sure to have your policy number, accident details, car descriptions, photos, and other information on you and keep copies of all documentation and payments.
  • How does the claims process work?
After filing a claim online, ask your agent about your insurance coverage and deductibles. Be sure you are aware of any time limits and how much time you have to submit your claim. Ask for an estimate on car repair costs and claim payment fees. If any problems arise, remember that you have the right to expedited claims settlements and client services. A claim representative will be happy to navigate the entire process with you.
  • How do I cancel my policy?
You can cancel your car insurance policy at any time. Some insurance companies may charge a fee if you cancel early on, but some may not. Be sure to double-check before making a cancellation on your pay-per-mile insurance policy.
  • Is there coverage in all 50 states?
Coverage is dependent on the insurance company you choose to work with. For instance, Metromile has the pay-per-mile insurance option available in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. Other companies like Nationwide’s SmartMiles and Allstate’s Milewise are limited to particular states as well. Your best option is to head to a comparison site like Compare.com to compare rates and see what’s best in your state.
  • Do the companies listed on Compare.com have a mobile app?
Almost all auto insurance companies have their own mobile app to handle claims, pay bills, and contact customer service.
  • Do the companies listed on Compare.com have Spanish offerings?
While some auto insurance companies have a bilingual Spanish customer service representative and translators on site, not everyone does. It is worthwhile to phone call ahead of time to make sure someone can translate, or have contracts available in Spanish.

Final Thoughts

If you are on a search for the best company to invest in a pay-per-mile insurance policy, let Compare.com do the research and price quotes for you, so you can decide on the best customizable package for your needs.

One of the things we ask when we walk you through our quick-and-easy quote process is your average mileage, so you’ll be sure to know by the time you receive your quotes if pay-by-the-mile is the right choice for you.

Still not sure if pay-per-mile is something you should look into further? Simply enter your ZIP code below and get a definitive answer in a matter of minutes!

Find out if pay-per-mile insurance is right for your needs